Georgia needs more landlords, not fewer, in the face of a housing shortage

The core issue is not that Georgia has too many landlords. It’s that there are too few.

First, it’s important to note that over the past decade, homeownership in the state has been rising, not falling. At the same time, large investor portfolios of single-family rentals have been shrinking. The share of single-family homes used as rentals has also declined.

In other words, investors are not steadily buying up the housing stock and pricing out homebuying families. Many have become “net sellers” who now put more homes on the market than they buy.

New construction is about half what it used to be

Credit: Handout

Credit: Handout

This reframes the debate. If prices are rising, it’s because families themselves are competing for too few homes. The shortage has much to do with local governments’ resistance to new construction, which means too few building permits are being issued.

In 2005, nearly 90,000 new single-family homes were permitted across Georgia, according to the Federal Reserve Bank of St. Louis. By 2009, as the state grappled with the Great Recession, that number had collapsed to roughly 14,000.

This made some sense in places like Jonesboro in Clayton County, where home prices fell so far — from around $150,000 to below $70,000 — that building new ones temporarily became a losing proposition.

But today, after prices have gone through the roof, new family home construction still sits below 50,000, little more than half of what it once was.

Multifamily construction — everything from duplexes to apartment buildings — remains tightly constrained by local land-use rules, holding steady at roughly 20,000 units or fewer per year.

Twenty years of severe underbuilding have real consequences. Without enough homes to buy or rent, prices rise for everyone.

The burden falls most heavily on lower-income households and young adults. Rents in the poorest Georgia neighborhoods have risen 40% or more compared to rents in upper-tier markets.

Limiting landlords does nothing to change this reality. The need for homes won’t disappear. Demand coupled with even less supply simply pushes rents higher.

If renters are locked out of single-family homes, they are forced into worse options farther from jobs, schools and family support.

Tough lending standards limit homeownership

During the same two decades, the importance of rentals increased.

After the housing crisis, federal mortgage agencies — Fannie Mae, Freddie Mac and the Federal Housing Administration — sharply tightened lending standards, effectively cutting off credit to most borrowers with scores below 740 (the average U.S. score sits just above 700).

Many Georgia families who would have responsibly bought homes in any prior decade were suddenly locked out.

Even when homes were deeply discounted in the years that followed, those families couldn’t buy them — not because investors outbid them, but because regulators blocked them.

Investors filled the void because homes were cheap, buyers were scarce and there were suddenly more renters. As prices recovered and some of the mortgage demand returned, investor activity slowed.

Banning any law-abiding landlord is an antirenter policy dressed up as consumer protection. It represents the same type of home-restricting policy that’s already failing the most housing-insecure Georgians.

Affordability requires more homes and more pathways for people to live in them — whether that’s through a rental company or with the reasonable ability to get a mortgage.

Georgia does not have a landlord problem. It has a housing shortage.

Kevin Erdmann is a housing market analyst and a senior affiliated scholar with the Mercatus Center at George Mason University.